PayPal helps scammer steal PlayStation 3
Herman "sold" a PS3 to an eBay thief whose scam involved turning up in person to collect the gear. If it seems stupid to be taken so brazenly, bear in mind the important part: PayPal, which is owned by eBay, told him it had verified the scammer's address.
I called Paypal to complain, and they told me the address existed, but it was not his address. I asked them, "You said your website needs address verification before anyone can send out instant payments, correct? What is the point of the address verification if you don't check it BEFORE allowing him to send instant payments?" Their reply? It was an issue they were "working on."
The problem with PayPal is simple: it can recover money from legitimate customers, but not from fraudsters. As a consequence of this, the money PayPal stands to lose on any given transaction is your risk to bear. The purpose of its bogus anti-fraud theatrics is to conceal the moral hazard it creates for itself by displacing its own risk onto consumers.
I Literally Placed My PS3 In A Scammer's Hands [Consumerist]
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PayPal and eBay's entire business model rests on their anti-fraud due diligence. Shifting the risk to customers means they're competing directly with Craigslist.
eBay clearly went through some hard times with their layoffs. (As a publicly traded company I could even check their ledgers if I were so inclined.) But this cowardly tactic to save money in the short-term amounts strategy of eating the seed corn in the long run.
Paypal is notorious for harboring scammers.
The "scammer" gets a "negative" balance in their Paypal account. The "scammer's" solution? Don't use PP anymore after the scam. What's a negative balance in a virtual currency that you don't use? Oh ya, it's nothing.
Meanwhile, the actual honest person in the transaction won't recover a dime. And PayPal won't pay them. PayPal might rule in favor of the honest person, but the ruling means nothing if nothing is actually recovered.
PayPal will not foot the bill so to speak, to prosecute scam artists. They won't hire a credit auditor, and they won't place liens on property. So the inaction of the PP service promotes an environment that harbors these scammers. No real-world repercussions for virtual currency pretty much amounts to this post: anonymous.
And we all know how that guy "Anonymous" is on the internet.
Man, I need to make a BB account.